SUPREME COURT(SC) INVALIDATE ELECTORAL BONDS
1. Context
The Supreme Court has declared the Electoral Bonds Scheme as unconstitutional. Donor anonymity was the main feature of the scheme, which has been criticised for long by transparency activists. These bonds constituted an important means of funding political parties since 2018. The court found that the scheme violated the citizens’ right to information about the sources of finances raised by political parties. It directed the full disclosure of all details of contributors, recipient parties and denominations.
2. What was the Electoral Bond Scheme?
An electoral bond is in the nature of a promissory note which shall be a bearer banking instrument that does not carry the name of the buyer or payee. Any citizen or company could buy these bonds in denominations of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore and donate it to a political party. It can be encashed only through a bank account with an authorised bank. The State Bank of India was the bank authorised to issue and encash these bonds
3. What changes were made to the scheme?
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4. Government's Version
- The government justified the scheme by emphasizing its ability to facilitate the transfer of funds to political parties through lawful banking channels, allowing individuals to support their chosen parties while discouraging unregulated cash contributions.
- The confidentiality granted to donors was presented as advantageous, fostering contributions of clean money to political parties.
- The utilization of established banking channels was asserted to diminish the influence of black money in election funding, and donor anonymity was highlighted to alleviate concerns about potential retaliation or pressure from parties to which donors had not contributed.
- In a notable argument, the government contended that citizens did not possess a general right to be informed about the financial backing of political parties.
- It asserted that the right to information was not of a broad nature but rather an evolution by courts specifically aimed at enabling voters to make informed choices in favor of the ethically sound candidate
5.Supreme Court Ruling
- In prior rulings, the highest court has affirmed that voters possess the right to information crucial for the effective exercise of their voting freedom.
- Consequently, the court maintained that details regarding funding to a political party are vital for a voter to express their right to vote effectively.
- The Electoral Bond Scheme, insofar as it compromises this right by anonymizing contributions through bonds, infringes upon Article 19(1)(a), which safeguards the freedom of expression.
- Regarding the objective of curbing black money, the court applied a proportionality test to assess whether the limitation on voters' right to information through donor anonymity was achieved through the least restrictive means.
- It suggested that alternatives, such as electronic transfer for small contributions and donations to an Electoral Trust for larger amounts, were available.
- Since the government failed to demonstrate that the scheme represents the least restrictive means to balance contributors' "informational privacy" and the right to information on political contributions, the amendments to the IT Act and RPA were deemed unconstitutional.
- Concerning changes to the Companies Act, the court determined that the removal of the disclosure requirement on contribution details violated the voter's right to information. Additionally, the scheme permitted both profit-making and loss-making companies to make political contributions, whereas previously, companies could only donate a percentage of their net profit.
- Given the higher risk of quid pro quo in the case of loss-making companies, the amendment was deemed arbitrarily manifest
6.Way forward
The electoral bonds scheme was introduced to enhance transparency, it has generated significant debates and concerns. A comprehensive way forward should focus on striking a balance between anonymity for donors and the citizens' right to know the financial sources of political parties. Transparent and accountable political funding is crucial for upholding the democratic values and integrity of the political process in India.
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For Prelims: Electoral Bonds, SBI, Election Commission of India, Right to Know, Finance Act 2017, Prime Minister's Relief Fund
For Mains:
1. Examine the challenges and controversies surrounding the Electoral Bonds Scheme, particularly regarding donor anonymity and transparency in political funding. How have these issues raised concerns about the integrity of the political process in India? (250 Words)
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Previous Year Questions
Prelims
1. Consider the following statements: (UPSC 2017) 1. The Election Commission of India is a five-member body.
2. Union Ministry of Home Affairs decides the election schedule for the conduct of both general elections and bye-elections.
3. Election Commission resolves the disputes relating to splits/mergers of recognised political parties.
Which of the statements given above is/are correct? A. 1 and 2 only B. 2 only C. 2 and 3 only D. 3 only Answer: D 2. With reference to the Constitution of India, prohibitions or limitations or provisions contained in ordinary laws cannot act as prohibitions or limitations on the constitutional powers under Article 142. It could mean which one of the following? (UPSC CSE 2019) Answer: B 3. Consider the following statements : (UPSC 2021) 1. In India, there is no law restricting the candidates from contesting in one Lok Sabha election from three constituencies.
2. In the 1991 Lok Sabha Election, Shri Devi Lal contested from three Lok Sabha constituencies.
3. As per the- existing rules, if a candidate contests in one Lok Sabha election from many constituencies, his/her party should bear the cost of bye-elections to the constituencies vacated by him/her in the event of him/her winning in all the constituencies.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. 1 and 3 D. 2 and 3
4. Consider the following statements about Electoral Bond Scheme 2018: (RPSC RAS Prelims 2018)
(A) The aim of this scheme is to bring about transparency in the funding process of political parties.
(B) Only the political parties recognized by the Election Commission which secured not less than one per cent of the votes polled in the last general election to the House of People or the Legislative Assembly of the State shall be eligible to receive the Electoral Bonds.
(C) Electoral Bonds shall be valid for fifteen calendar days from the date of issue.
(D) The Electoral Bond deposited by an eligible political party in its account shall be credited on the same day.
Which of the above statements are correct?
1. Only (A) and (B)
2. (A), (B), (C) and (D)
3. Only (B), (C) and (D)
4. Only (A), (C) and (D)
Answer: 2
5. With reference to the PM CARES Fund, consider the following statements: (AFCAT 27 2022)
I. The amount collected by it directly goes to the Consolidated Fund of India.
II. It can avail donations from the foreign contribution and donations to fund can also avail 100% tax exemption.
Which of the above statements is/are correct?
A. I only B. II only C. Both I and II D. Neither I nor II
Answer: B
6. The Prime Minister's National Relief Fund is operated by which one of the following bodies? (CDS 2019)
A. The Prime Minister's Office (PMO)
B. The National Disaster Management Authority
C. The Ministry of Finance
D. The National Development Council (NDC)
Answer: A
Mains 1. In the light of recent controversy regarding the use of Electronic Voting Machines (EVM), what are the challenges before the Election Commission of India to ensure the trustworthiness of elections in India? (UPSC 2018) 2. Discuss the role of the Election Commission of India in the light of the evolution of the Model Code of Conduct. ( UPSC 2022) |
Source: The Hindu
